U.S. Supreme Court

Realty Associates Securities Corp. v. O'Connor, 295 U.S. 295 (1935)

1. The compensation of referees in bankruptcy for performance of their public duties, is limited to what is clearly warranted by law. P. 295 U. S. 299.

2. The provision in § 40(a) of the Bankruptcy Act allowing the referee one-half of 1% upon the amount to be paid to creditors upon the confirmation of a composition, must be construed in harmony with the policy of Congress to prevent extravagance in bankruptcy administration. P. 295 U. S. 299.

3. Bondholders of the bankrupt agreed to a composition providing for immediate payment of 15% of the par value of their bonds in cash; postponement of the time for paying the remaining principal, and reduction of interest rate, the interest to be paid only out of earnings, but to be cumulative and payable in full upon maturity of the principal. The composition also provided that they should be represented on the board of directors of the bankrupt company, and there were to be restrictions on the company's investments and creation of new debts. Held, that "the amount to be paid" upon which the referee's compensation should be computed under § 40(a), supra, was not the full principal amount of the bonds, but was no more than the 15% cash plus the market value of the bonds as it would be after applying the 15% in reduction of the principal. P. 295 U. S. 300.

4. General Order XLVIII(4), which fixes the commissions of referees in proceedings under § 74 of the Bankruptcy Act, cannot control in the judicial determination of the compensation allowable in proceedings under § 12 of the act. P. 295 U. S. 300.

74 F.2d 61 reversed; District Court, 6 F.Supp. 549, affirmed.

Certiorari, 294 U.S. 701, to review the reversal of an order of the Bankruptcy Court, 6 F.Supp. 549, fixing the compensation of a referee. chanroblesvirtualawlibrary